Federal work leads Maximus to record earnings

Maximus has had a strong fiscal year and the company reports growing opportunities, particularly for its federal business.

During Maximus’ fourth-quarter conference call with investors on Tuesday, CEO Bruce Caswell said the company has a pipeline of opportunities totaling $30.7 billion, which includes both proposals for evaluation and those in preparation. Odds that Maximus tracks are also part of that number.

New work accounts for three quarters of this pipeline, while 57% of the total is in the federal segment.

Caswell told analysts that the key drivers of these opportunities are clinical assessments and technology solutions that support IT modernization initiatives at federal agencies.

The clinical assessment work goes beyond what Maximus provides for Veterans Affairs.

Headquartered in Reston, Virginia, Maximus sees new opportunities to offer these services to other agencies responsible for medical fitness testing and other workplace health needs. At the state level, Maximus is interested in consolidated ways to assess Medicaid recipients.

“Both of these types of work and opportunity are well suited to Maximus because of the previous acquisitions we’ve made,” Caswell said, citing the 2021 acquisitions of Attain’s federal practice and Veterans Evaluation Services.

IT modernization efforts are accelerating, and Caswell describes it as a crowded competitive landscape.

“We think we’re very well positioned in terms of reputation and capability,” he said.

In particular, the acquisition of Attain Federal brought Maximus more capacity needed for IT modernization.

In October 2021, the company was awarded a $323 million contract to modernize the Securities and Exchange Commission’s document filing system. Maximus attributed this win directly to Attain Federal’s team’s contribution to the bid.

Attain Federal and VES represent Maximus’ largest acquisitions to date, priced respectively at $430 million for Attain and $1.4 billion for VES.

“We’re seeing a lot of collaboration across the business, across sales functions and solution development teams to pull capabilities from one segment to another,” said Caswell.

One example is how the company leverages its Medicaid eligibility and registration service offerings to pursue opportunities such as enrollment in health care for federal employees.

“The net result of that is that 18 months ago we really wouldn’t have been eligible to bid for the kind of work we’re seeing now,” Caswell said. “It gives me confidence that we will generate the revenue synergies that we anticipated from the acquisitions.”

For Maximus’ fiscal 2022 ended Sept. 30, revenue increased 8.9% to $4.63 billion compared to $4.25 billion for fiscal 2021. Organic and acquired growth accounted for 800 Millions of US$ year-over-year in COVID-19 related work more than recouped .

Maximus anticipated this drop and discussed it during its August third-quarter earnings conference call. During that period, COVID work fell by $413 million.

Federal service revenue for the fiscal year was $2.26 billion. That company stuck to its largest program: a nine-year, $6.6 billion contract with the Centers for Medicare and Medicaid Services to continue operating citizen contract centers.

The company’s order backlog at the end of the fiscal year totaled $10.5 billion, and there is another $800 million batch of contracts that have been awarded but not signed, Caswell said.

Maximus expects fiscal year sales to be between $4.75 billion and $4.9 billion with operating income between $390 million and $415 million.


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